Lifestyle Holdings target regional markets

HARARE - Zimbabwe Stock Exchange-listed diversified concern Lifestyle Holdings (formerly TN Holdings) is making strategic plans to penetrate the regional market as the group gears to increase revenue streams and unlock shareholder value.

With liquidity challenges prevailing in the country biting into companies’ operating revenue, lack of foreign direct investments and clogged external credit lines, many Zimbabwean firms are finding it prudent to invest in regional markets to get new capital injections.

Lifestyle Holdings chief executive Tawanda Nyambirai said the move was aimed at diluting the liquidity crisis in the Zimbabwean economy.

“Much as we want to see ourselves expanding and satisfying the local market, we are also looking at making inroads in the regional market. The group has already made significant strides in securing markets outside the country and we have concluded and reached an agreement with a South African company to supply furniture in more than 30 outlets in South Africa,” he said.

Lifestyle Holdings furniture manufacturing arm, TN Harlequin Luxaire accounted production capacity has been significantly increased such that the local market can now only take 30 percent of the production capacity while 70 percent of the remaining capacity is earmarked for the regional market.

In line with the group’s diversification strategy, Nyambirai said the company has also changed the composition of TN Bank’s board to include international board members such as Metallon Corporation chief financial officer Kwaku Akosah-Bempah, Canadian-born Guy Pearce from Global Banking group and Nelson Mandela’s daughter, Makaziwe Mandela.

“The bank would have to be proactive in terms of international relations. So we have gone ahead of the market and changed the composition of the board. Our hope is to open up more doors that way into other regional countries,” he said.

For the first six months to June 2012, the group’s revenue declined by $1,4 million to $24,7 million due to lower merchandise sales, while basic earnings per share decreased from $0,73 in the corresponding period to $0,23.

Nyambirai said the financial results were in line with the projection given to shareholders at the general meeting that approved TN Bank demerger.

“The decrease in revenue is because last year’s first half sales were significantly increased by a highly successful merchandise promotion that was held in the first half of last year, which this year is planned for the second half,” he said.

Nyambirai said operating expenses increased from $14,7 million to $21,8 million in line with the establishment of 10 additional TN Bank branches and the ongoing growth including the launch of TN Mart and TN Grill, investments that are expected to bear fruit in the future.

The group’s net profit after tax decreased from $5,7 million in June 2011 to $1,8 million for the period under review, while total group assets increased by $16,6 million from $140,4 million in December 2011 to $157,1 million in June 2012.

TN Bank achieved a net profit after tax of $1 million for the half year against an illiquid environment that caused a significant increase in the costs of funds.

Nyambirai said the performance was driven by a good quality loan book, curtailment of costs through sharing of facilities among other things.

With $36 million capital by June 30, TN Bank already exceeds the December 31 capital requirements of $25 million.

TN Harlequin Luxaire accounted for 63 percent of group revenue while contributing $20,4 million in the period under review.

TN Mart and TN Grill were successfully launched in the second quarter of the year.

“TN Mart now has two branches, while TN Grill has five. The branches that have already been launched are expected to breakeven by year end. The group considers these businesses to be significant growth areas,” said Nyambirai.

TN Asset Management remained compliant with the regulatory capital requirements at $1,04 million against the regulatory requirement of $500 000, and recorded a profit after tax of $101 000.

TN Financial Services discharged some significant mandates, including handling the disposal of the majority and controlling stake in Tractive Power Holdings.

In the outlook period, Nyambirai said TN Grills will be opened in areas outside Harare while the Rufaro Marketing outlets will enable TN Mart and other retail interests of the group to be accessible to the large number of people in high density areas.

“The group will continue to seek innovative and dynamic ways to generate value for its stakeholders,” he said.

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